Some pharmacists being told to up-charge thousands of dollars

(InvestigateTV) - Drug prices continue going up – and those hikes affect everyone – from patients who are buying their prescriptions to anyone who pays taxes. There are some cases where benefit managers are hiking up costs hundreds or thousands of dollars above the price you’d pay without using insurance.

For example, one small bottle of a lower dosage generic version of Viagra used to treat low blood pressure costs Louisiana pharmacy manager Gerald Michel $31. At the checkout counter, customers could find a much higher price tag because the pharmacy benefit manager (PBM) told Michel’s family-owned pharmacy to charge the customer more than $2,000.

These two receipts show the cost one patient would have paid for a medication if using insurance (left) and what the patient actually paid by going around insurance (right). (Source: InvestigateTV)

"It’s just unadultered greed,” Michel said.

Rather than charging that huge mark-up, Michel’s pharmacy chose to bypass the pharmacy benefit manager and was able to charge just $44.20.

“That’s quite a big difference. It’s ridiculous. Is it just about a money grab now in health care? Everybody’s overpaying,” Michel said.

According to a recent University of Southern California study, customers overpaid on nearly 25 percent of all pharmacy prescriptions. In most cases, it would have been cheaper for the consumers to buy the drug without using insurance.

“You buy insurance for the reason of lowering your prescription drug costs. But more and more patients are able to find prescriptions less expensive if they don’t use insurance than if they do,” said Doug Hoey, who leads the National Community Pharmacists Association.

Carol Shoemaker, a patient who buys many medications for her family, has learned to shop around to find competitive prices and keep more money in her bank account.

“I pay $600-700 a month for a premium because I’m a single person. I don’t have a company getting any discounts with big group insurance policies. So, it’s very distressing. You’re already spending a ton of money on insurance, but you still have to pay for all of the extra,” Shoemaker said.

For one example of Shoemaker’s cost savings: One prescription would have cost her $613 with her insurance, but she found she can pay less than $300 when she bypasses her insurance.

“For me that’s just too much money to be throwing out the window,” Shoemaker said.

The USC study cited the drugs with the most frequent overpayments: zolpidem tartrate (a drug used to treat insomnia), amlodipine besylate (for high blood pressure and chest pain) and prednisone (a commonly-prescribed steroid). In its six-month sample, the USC researchers estimated $135 million in overpayments.

All of those inflated costs come back to patients’ and even the country’s bottom line; that’s because studies show U.S. consumers and the government pay more for prescription medication than any other country.

“The drug prices in the U.S. for the exact same drugs are often exponentially higher than they are in Canada and in every other country,” said Gabriel Levitt, president of PharmacyChecker.com, a company that verifies overseas pharmacies and compares prices for different drugs.

“We are at a competitive disadvantage,” Hoey said. “And at some point we are going to have to make decisions as to what do we fund? Do we fund health care? Or do we fund fixing that bridge that’s about to fall into the river? Or funding our military?”

“I think the most generous would call it capitalism. I would call profiteering and greed in many cases. Because it’s not a fair system,” Hoey said. “If it was a fair system where a consumer could say, ‘I’m choosing a more expensive product’ or ‘I’m choosing to go to a more expensive pharmacy.’ That would be capitalism, in my opinion. But because it’s opaque and the consumer doesn’t know, I think it’s greed and profiteering.”

Hoey places the blame on those pharmacy benefit managers, or PBMs, which act as a middle man in the drug industry, setting the price of prescriptions.

“They are the wizard behind the curtain that is orchestrating all the prescription drug pricing,” Hoey said.

The nation’s biggest PBMs are Express Scripts, Optum Rx and Caremark.

“There are companies that are smaller that are household names like McDonald’s or Lowe’s or Home Depot, you know, big companies like that. You can add those companies together, and they’re still smaller than these PBMs,” Hoey said.

In the case involving Michel’s pharmacy, a quick phone call revealed the PBM forcing him to overcharge his customer nearly $2,000 was Optum Rx, which is affiliated with the nation’s largest health insurance company, United Healthcare.

An Optum spokesperson tells InvestigateTV the blame is on the pharmacy.

“If a member’s copay is higher than the cash price that the pharmacy enters in the point of sales system the consumer should pay the cash price,” Andrew Krejci of Optum RX told us by email. He added, “If the pharmacy is not accurately entering their cash price they are in violation of their contract with us.”

Optum explained the patient copay amounts come from prices pharmacies plug in on their end. In this case, Michel’s pharmacy initially submitted a total price of $8297.36 to Optum. That’s significantly higher than the $30 the pills cost the pharmacy to buy. According to Optum, it actually provided the customer with a huge discount off the pharmacy’s submitted price, charging a $2,004.30 copay. If Michel had used that price calculation, his pharmacy would have kept $119.06, and $1880.02 would have gone to Optum. Instead, the pharmacy bypassed Optum and charged the customer $44.20.

Optum said the pharmacy violated its contract, by inflating the cost. Krejci added if the pharmacy would have entered in $44.20, that is what the customer would have paid. The problem, Michel tells us, is pharmacies have to submit higher costs so they don’t lose money.

Multiple other pharmacists told InvestigateTV they deal with situations in the same way as Michel.

To save yourself money on prescriptions, start asking questions. First, see if your prescription would be cheaper without using insurance. Next, price it out at different pharmacies, and don’t forget to check out community or independent pharmacies, which can sometimes be much cheaper. Finally, always ask your pharmacist or doctor if there’s a better alternative for the drug prescribed.

Copyright 2018 InvestigateTV. All rights reserved.

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As the city of New Orleans's most honored investigative reporter, Lee Zurik has been uncovering and reporting impactful stories on WVUE since 2009. Following up his tenacious inquiries with detailed analysis and powerful storytelling, Lee delivers unprecedented accountability of government officials, private citizens and corporations.

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